Far from lowering prices, Ms. Leonard said, the traditional funeral-home siblings of the discount shops will probably find ways to raise them, recouping from less price-sensitive customers the profits they forgo in the shops.
The suggested function is composed of measures for the single profit parameters and indicates how sensitive a company's profit function is to defect levels.
As a consequence "while profits remain sensitive to the economic cycle, those waiting for the structural mean reversion in margins will continue to be disappointed," he says.Andrew Smithers of Smithers & Co, a consultancy, believes that executives are given incentives to boost margins in the short term at the expense of long-term value for shareholders.
Profits are sensitive to discrimination and firm dispersion.
Moreover, state-owned oil companies, typically less sensitive to near-term profits, are ramping up spending aggressively.
That is why the Blackout of 2003 is likely to become more than an occasion to bemoan some of the outdated technology employed by profit-sensitive utility companies or the inconvenience of returning to a darkened home.
While the warehouse's policy and profit are very sensitive to the estimation of parameters, the retailer's decisions and profit change can almost be ignored.
Cyclical stocks, whose profits are especially sensitive to economic growth, are cheap on a price-earnings basis, Mr. Wien said, but few investors want to own them with the economy apparently slowing.
Lower profits and more sensitive pay structures will mean that most jobs are repriced across the industry but the best people will still be the subject of frenzied competition and will still command huge sums.
He was precluded from selling the options, which he was awarded for his service as chief executive of the Halliburton Company, until 2001 at the earliest, and their value by then would be affected by the company's profits, which are sensitive to the price of oil.
